The shakeup of insurance policies held within superannuation funds, first signalled in last year’s Federal Budget, has commenced with the passing of elements within the Protecting Your Superannuation Package Bill 2018.
Inactive superannuation accounts risk losing insurance cover.
Easily the most alarming part of this new legislation is from 1 July 2019, superannuation funds will be required to cancel a members insurance cover when their superannuation account becomes “inactive”. An account is defined as inactive when the fund hasn’t received a contribution or rollover into their superannuation account for a continuous period of 16 months.
A member can choose to keep their insurance by contacting their fund in writing or by making their account active with a contribution or rollover.
Unfortunately though, this means some unsuspecting members could actually lose their existing insurance cover on 1 July this year!!! Many individuals need to take action if they don’t want to lose their existing insurance cover.
As of 1 April 2019, superannuation funds were required to identify members who had an “inactive account” and notify them about their risk of losing their insurance cover starting from 1 July 2019. Please make sure your superannuation funds have the correct mailing address for you and that you look out for such letters as these typically sit on kitchen tables unopened!!!
Over the years, many Australians have been advised to maintain some insurance coverage within an old superannuation fund for tactical reasons. It may be that the cover was automatically provided to a member upon joining a fund and might be the only insurance they can obtain. For example, this could be due to more recent health issues preventing them from obtaining a new policy.